Tax Exemptions of Children After a Las Vegas Divorce
Are you the non-custodial parent and entitled to claim one or more of your children for the child tax credit, exemptions, and other tax purposes? Did you know that even with a Court Order as a part of your divorce or custody matter, that the IRS might reject your trying to use that entitlement if the other party elects to make the claim despite giving it to you? In simple terms, that is because Federal Law preempts State Law, and the IRS operates under Federal Jurisdiction and will follow the Tax Code regardless of your agreement or Court Order. The IRS will look to the guidelines as set forth in the Tax Code and give the claim to the person who meets those guidelines. And, this can occur, even after you’ve taken the benefit, resulting in the IRS asking you for a refund, perhaps of money that you already spent.
So, what is a person to do if they don’t meet the tax code guidelines but by agreement, often a compromise that is negotiated, the other party releases their rights to the child tax benefits and gives them to you. The issue can be complicated and the remedy often means going back to Court, but there is a much simpler solution.
The simple solution: Have the other party, the party with primary physical custody, or who has the child more than 50% of the time (even a joint physical custodian often has less than 50% of the time) sign IRS Form 8332. Form 8332 is to provide an approved release of one’s tax benefit entitlement and give it to the other party who would not be entitled to the benefit pursuant to the tax code guidelines. Form 8332 is named “Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent”. The name says it all. The form can be used to get the custodial parent to release for just one year (part 1) or for multiple years (part 2). But, be aware, that the custodial parent can always revoke their release (part 3), but that revocation would not take effect until the tax year after the calendar year in which the release was initially given. Thus, best practice would be to have the custodial parent sign form 8332 each year that you, the non-custodial parent intends to take the benefit.